One day Bilbo Baggins, a hobbit who lives at Bag End in Hobbiton, receives a visit from Gandalf, the wizard. Gandalf is known for leading young hobbits off on adventures, although respectable hobbits do not do such things. Bilbo is not interested in going on an adventure so he sends Gandalf away. The wizard returns the next day along with Thorin Oakenshield, a dwarf of great standing and twelve other dwarves. They seek a burglar to travel with them to the home of their ancestors in the Lonely Mountain to take back their families’ treasure that is now being guarded by a fearsome dragon named Smaug.

Much to his dismay Bilbo finds himself joining the dwarves, although he does not have any qualifications as a burglar. The thirteen dwarves and hobbit are soon joined by Gandalf, and their quest to reclaim the treasure begins. Their first misfortune happens when they stumble onto a threesome of trolls in the forest while making camp. They are all captured, except for Gandalf, who had disappeared earlier in the day. The trolls are trying to decide how best to eat the dwarves and hobbit when a voice keeps them continually arguing with one another until the sun rises. The trolls are then turned to stone and it is revealed that Gandalf’s was the voice that saved the dwarves and hobbit.

Gandalf then takes the travelers to his elf friends in Rivendell. Their leader is Elrond, a wise and venerable elf. The travelers receive much needed rest and supplies before they continue on their way East. Their travels take them through the Misty Mountains, where they encounter terrible weather which compels them to seek shelter in a cave. During the night they are jumped upon by goblins, except for Gandalf who escapes, and are taken deep into the mountain. Gandalf rescues the dwarves and hobbit and kills the goblin leader, the Great Goblin, as well. At one point Bilbo gets separated from the others and finds a ring of gold that turns the wearer invisible. This ring belongs to a treacherous creature named Gollum, who lives in the middle of a lake in a deep, dark cave the goblins avoid. Gollum tries to attack Bilbo, but the hobbit escapes with the ring and finds his friends once again.

The travelers escape from the goblins only to be trapped in trees in a glade by wild wolves called Wargs. The Wargs are waiting to meet the goblins when they discover the dwarves, hobbit and wizard. Luckily, the fifteen adventurers are rescued by eagles that fly them away from the Misty Mountains and take them safely out of the reach of the goblins. Gandalf then leads them to the home of Beorn, a skin changer who can turn into a large black bear. Beorn gives the travelers ponies to get them to Mirkwood and enough supplies to see them further on their travels. When they reach Mirkwood, they send the ponies back and Gandalf leaves them for business of his own. He tells the dwarves and hobbit to not leave the path while in the forest.

The path through the forest of Mirkwood seems endless and in the end the dwarves and hobbit leave the path to follow lights they see within the trees. It is an elven feast that quickly disappears each time they approach. After a while, the group is captured by giant spiders and Bilbo must use his ring and sword, Sting, to rescue them. Once the travelers are free of the spiders they realize Thorin is missing. They continue to seek the help of the elusive elves and are eventually taken prisoner by them, as Thorin has been. Bilbo is the only one who remains free. The dwarves are taken to a great cave where the Wood-elves live, and are held prisoner. Bilbo rescues them and they escape by riding inside empty barrels down the river to Lake-town. Bilbo has to ride on the top of the barrels wearing his ring to maintain his invisibility.

The dwarves and Bilbo arrive at Lake-town and present themselves to the Master of the town. Thorin identifies himself as the son of Thrain and grandson of Thror, who was King under the Mountain, and tells them he has returned to reclaim his treasure from the dragon, Smaug. The Men of the lake give them supplies and ponies to help them on their trek to the Lonely Mountain. The Master hopes that once they have the treasure they will share it with the town. The dwarves and hobbit soon make it to the Lonely Mountain. There, they begin their search for the secret door that will lead them into the hall of the dwarves without the dragon knowing they are there.

It takes the travelers a great deal of time, but they do find the door. Bilbo goes into the passage and follows it to the lair of the dragon, which is asleep on a huge pile of treasure. Bilbo steals a two handled cup, and the dragon realizes someone has taken a piece of his treasure. To keep the travelers from taking the rest of his hoard, Smaug destroys the secret entrance and flies to Lake-town to seek his revenge upon the men there. Smaug is killed by an archer named Bard. Once the people realize that the dragon is dead and the treasure is not guarded, a contingent of men and elves go to the Lonely Mountain to reclaim it. Thorin is waiting for them and refuses to share any of the treasure. Dain, Thorin’s cousin from the Iron Hills, comes to his aid.

A battle begins between men, dwarves, and elves, when they have to band together to fight the goblins and wolves that also come to claim the treasure. The Battle of Five Armies ends with the defeat of the goblins and wolves. Thorin is killed along with his nephews, Kili and Fili. The rest survive and Dain becomes King under the Mountain and the remaining dwarves stay with him. The Men of the lake, led by Bard, remain to rebuild the town of Dale nearby. Bilbo and Gandalf return to Hobbiton, where Bilbo is not seen as respectable any longer due to his adventurous ways and strange companions.